Tinna Rubber & Infrastructure Shares Plunge 19% After Q3 Profit Decline
Tinna Rubber: The shares of Tinna Rubber and Infrastructure Limited, one of Asia’s largest recyclers of End-of-Life Tyres (ELTs), witnessed a sharp 19% intraday decline after the company reported an 18% year-on-year (YoY) drop in net profit for the third quarter of FY25 (Q3FY25).
Stock Price Action
With a market capitalization of ₹1,866.52 crore, Tinna Rubber’s stock saw a steep fall during Monday’s trading session. The stock hit an intraday low of ₹976.10 per share, compared to the previous closing price of ₹1,206.85 per share, marking a 19% decline. However, the stock recovered slightly from its day’s low and was last trading at ₹1,089.65, still down 9.7% from the previous session’s close.
Q3FY25 Financial Performance
The sharp decline in stock price followed the release of Q3FY25 earnings results, which revealed mixed financial performance.
| Financial Metric | Q3FY24 | Q3FY25 | YoY Change | QoQ Change |
|---|---|---|---|---|
| Revenue from Operations | ₹93 Cr. | ₹122.7 Cr. | +32% | +4.3% |
| Net Profit | ₹9.95 Cr. | ₹8.15 Cr. | -18% | -32% |
| Earnings Per Share (EPS) | ₹5.81 | ₹4.76 | -18% | -33% |
While revenue saw a strong 32% YoY growth, rising from ₹93 crore to ₹122.7 crore, the net profit fell 18% YoY to ₹8.15 crore. Moreover, compared to the previous quarter (Q2FY25), the company’s net profit declined by 32% from ₹12 crore, raising concerns among investors about profitability and cost pressures.
Additionally, the company’s Earnings Per Share (EPS) also dropped 18% YoY, from ₹5.81 to ₹4.76, reflecting the pressure on bottom-line earnings. On a quarterly basis (QoQ), EPS declined by 33%, adding to investor concerns.
Fundraising Through QIP
Amid the earnings announcement, Tinna Rubber revealed plans to raise ₹150 crore via a Qualified Institutional Placement (QIP). The funds will be raised in one or more tranches to strengthen the company’s expansion plans and operational capabilities.
The QIP announcement signals the company’s intention to bolster liquidity and fund future growth initiatives, but investors remain cautious about the short-term impact on earnings per share and stock dilution.
Company Overview & Expansion Plans
Tinna Rubber and Infrastructure Limited is a leader in End-of-Life Tyre (ELT) recycling and rubber processing, producing crumb rubber, steel wires, and other recycled materials. The company boasts over five decades of expertise and is recognized as the only company in the world with the most diversified applications in tyre recycling.
The company operates across four major segments:
- Infrastructure
- Industrial
- Steel
- Consumer
With five domestic recycling plants and one in Oman, Tinna Rubber has a strong presence in the sector. Most of its domestic plants are located near ports, facilitating the import of waste tyres and export of finished products. Looking ahead, the company aims to expand to 10 locations by 2027, signaling long-term growth ambitions.
Key Financial Ratios & Valuations
Investors and analysts keep a close eye on financial ratios to assess the company’s valuation and financial health.
| Metric | Value |
|---|---|
| Market Cap | ₹1,800 Cr. |
| Current Price | ₹1,051 |
| High / Low (52W) | ₹2,179 / 580 |
| Stock P/E | 34.4 |
| Book Value | ₹89.7 |
| Dividend Yield | 0.48% |
| ROCE (Return on Capital Employed) | 32.6% |
| ROE (Return on Equity) | 36.0% |
| Debt to Equity | 0.76 |
| Industry P/E | 36.1 |
| Debt | ₹116 Cr. |
| PEG Ratio | 0.14 |
| Intrinsic Value | ₹458 |
| Graham Number | ₹248 |
| Piotroski Score | 5.00 |
| Price to Book Value | 11.7 |
The Return on Capital Employed (ROCE) stands at 32.6%, and Return on Equity (ROE) is 36%, indicating efficient capital utilization. However, with a high Price-to-Book (P/B) ratio of 11.7, the stock appears overvalued compared to its intrinsic value of ₹458.
Investor Takeaway
The recent earnings report has raised concerns among investors regarding the company’s profitability and cost structure. Despite strong revenue growth, the sharp decline in net profit, EPS, and quarter-on-quarter performance has triggered a sell-off in the stock.
While the company’s long-term growth plans and expansion strategy remain promising, near-term challenges, including margin pressures and declining net profits, may continue to impact investor sentiment.
For investors, watching the company’s upcoming quarters, fundraising utilization, and expansion progress will be crucial. As the stock attempts to stabilize post-earnings, long-term investors may look for better entry points, while short-term traders should remain cautious about volatility and earnings pressure.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.